Author: Dário Yanagita
Technical Review: Alberto Nakamura

 

In Lean thinking, value is what the customer is willing to pay for, as it transforms something from its current state into a desired state, solving a relevant problem or meeting a real need.

However, understanding the concept is not enough. It is necessary to recognize, in practice, when an activity adds value and how a process, as a whole, generates value.

And this distinction is fundamental in Lean.

In this article, we will explore this reasoning in greater depth.

The Value Stream: the coffee that reaches your kitchen

Let us revisit the example of coffee. For a simple package to reach your home, a value stream composed of several successive transformations takes place:

• planting;
• maintenance;
• harvesting;
• drying;
• processing;
• roasting;
• grinding;
• packaging;
• transportation;
• display at the supermarket.

Each stage involves people, decisions, technology, materials, and knowledge. Even without considering earlier phases, such as land acquisition, soil preparation, or environmental management, it is already possible to perceive the breadth of resources involved.

But a central question arises: At what exact moment is value created?

Why are resources not enough?

When applying the classic 4M logic (Method, Machine, Material, and Manpower), we can easily identify the need for technical knowledge, climate data, soil analysis, appropriate equipment, and qualified professionals.

However, possessing these resources does not, by itself, generate value.

This is one of the most common misconceptions in organizations:

• available equipment does not add value;
• documented methods do not add value;
• stored information does not add value;
• people merely allocated do not add value.
• resources are potential, not value.

In Lean, value only arises when a real transformation occurs, and that transformation must simultaneously meet the three criteria of value-added work:

• change the product, service, or information;
• be done right the first time;
• address something the customer perceives as necessary and would be willing to pay for.

In other words:
Activities add value, but only a coordinated flow generates value.

That is why a farm with excellent seedlings, a modern laboratory, and experienced professionals may still produce low-quality coffee — if the process does not flow, if decisions are delayed, or if resources remain idle.

Value is the result of coordinated action

In the example of selecting the ideal seedling, having knowledge, tools, and suppliers available is not enough.

Value only begins to emerge when someone:

• investigates;
• compares data;
• evaluates the soil;
• decides;
• plants.

Each of these actions adds value because it transforms the reality of that product or service.

However, generating value in the Lean sense depends on all these actions taking place at the right time, without waste, and within a continuous flow.

In other words:
Coordinated action + correct decision + right timing = value generation.

This reasoning also applies to administrative processes. Exchanging information, generating reports, or analyzing data does not add value by itself. These activities only add value when they support a decision that effectively improves delivery to the customer.

Lean reminds us that waste (Muda) is always lurking: rework, waiting, excess information, unnecessary transportation, bureaucracy, and overprocessing. These elements distort the customer’s perception and turn what should be value into frustration.

Why does this distinction matter?

Because organizations that are mature in Lean do not focus on “doing tasks.”

They focus on performing tasks that add value within a system that generates value.

In other words:

• value-added is micro (activity);
• value generation is macro (process and flow).

Or:

• adding value is the act;
• generating value is the outcome.

Lean companies focus on:

• doing the right task;
• the right way;
• at the right time;
• for a clear reason from the customer’s perspective.

Value is created through transformation.

Waste is created through its absence.

Understanding this line that separates the micro from the macro is a fundamental step toward evolving any production, administrative, or service process.

 

Dário Yanagita

Dário has 30 years of experience in the automotive industry in Brazil, including 15 years working at Toyota do Brasil. He has broad expertise across machining, assembly, logistics, quality, and environmental management. He has implemented Lean production lines, Kaizen programs, managed team development plans, and led Lean transformations in companies.

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